Lessons on Income Support
Paper Session
Friday, Jan. 3, 2025 2:30 PM - 4:30 PM (PST)
- Chair: Sarah Reber, Brookings Institution
How Does the Child Tax Credit Change the Time Allocation of Parents: Evidence from American Time Use Data
Abstract
The Child Tax Credit (CTC) plays a pivotal role in reducing child poverty rates and ensuringparents remain active in the workforce. However, there is a lack of information
regarding how these tax credits influence parental time allocation, specifically regarding
the time spent with children. Using a difference-in-differences framework, our study
aims to bridge this gap by investigating the effects of the 2017 CTC expansion on parents’
time allocation. The findings suggest that following the CTC expansion, parents residing
in areas with greater exposure to this policy change tend to reduce their involvement
in household and childcare tasks, allowing for more leisure time. This trend is particularly
noticeable among mothers. Upon closer examination, it becomes apparent that
the CTC reform primarily decreases the likelihood of parents engaging in basic childcare
responsibilities while having no significant impact on time spent with children completing
educational and recreational activities. We show that the effects of the 2017 CTC vary by
parents’ gender, thus contributing to a better understanding of how public policies can
effectively address gender discrepancies in household responsibilities.
Strengthening Work Requirements? Forecasting Impacts of Reforming Cash Assistance Rules
Abstract
Work requirements are perhaps the most controversial aspect of the Temporary Assistance for Needy Families (TANF) program, America’s sole federal cash assistance program for low-income families with children. In 2025, for the first time in nearly 20 years, the Fiscal Responsibility Act of 2023 (FRA) will implement policy changes intended to strengthen states’ work requirements. However, researchers’ and policymakers’ understanding of how FRA will impact states’ compliance with federal requirements is hampered by a lack of research and publicly available data.We tie information from reports submitted to the U.S. Department of Health and Human Services that are collected to administrative caseload and expenditure data to document several strategies that states currently use to comply with federal work requirements. We estimate that FRA will increase the stringency of work requirements in 23 states and that 5 states will begin to fall short of requirements. We note that several compliance strategies available to those states do not encourage work. We discuss changes in states’ work requirements that would promote better long-term economic and labor market outcomes for TANF recipients.
Fifty State Safety Nets: Trends, Patterns, and Policy Lessons
Abstract
The U.S. safety net is better characterized as fifty-one unique support systems for low-income people. We consider several major safety net supports – Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), and state and federal refundable tax credits – in 2001 through 2022, characterizing the eligibility and benefit rules in place in each state and year, taking into account interactions across programs. We then calculate the potential benefits available to a hypothetical set of families in each state and year. The results are presented at https://www.brookings.edu/articles/state-safety-net-interactive/.We use this information to answer three sets of questions. First, how have safety net generosity levels evolved at the national level? The safety net in aggregate expanded over the 2001-2022 period, with particular increases in the Great Recession era and a mostly temporary set of expansions in the Covid era. Relatedly, we see substantial variation in generosity across states, even after accounting for cost of living differences.
A second class of questions relates to the composition of safety net benefits. We see a movement away from cash assistance to in-kind assistance such as food and health insurance. Within cash assistance, we see more emphasis on refundable tax credits and less on traditional welfare. Again, there are differences across states with wide differences in the structure of TANF and state decisions about the earned income tax credit.
Third, we examine how the safety net serves different types of families – those with higher or lower levels of earnings, those with more or fewer children, and those with married or unmarried parents. We see a movement towards support of working poor and near-poor families, and away from support for families without earnings, for example. We also see differences in TANF and state tax programs that have different implications
Discussant(s)
Katie Bollman
,
Oregon State University
Tatiana Homonoff
,
New York University
Sheridan Fuller
,
Federal Reserve Board
Marianne Bitler
,
University of California-Davis
JEL Classifications
- I3 - Welfare, Well-Being, and Poverty
- H2 - Taxation, Subsidies, and Revenue